CDPQ backs Cogeco’s $1.4bn telecoms acquisition

Pension fund’s $315m investment gives communications group a 21% stake in cable assets across the Northeast US.

Cogeco Communications said it has agreed to a $1.4 billion acquisition of US cable assets owned by MetroCast after receiving an investment from Canadian pension fund Caisse de dépôt et placement du Québec.

Montreal-based Cogeco purchased the assets through its Atlantic Broadband subsidiary from MetroCast, a division of US digital cable provider Harron Communications. The deal was financed through a $315 million commitment from CDPQ and secured debt provided by Credit Suisse and Bank of America Merill Lynch.

The deal gives CDPQ a 21 percent stake in Atlantic’s holding company.

MetroCast’s network is primarily located in New Hampshire, Maine, Pennsylvania, Maryland and Virginia. Atlantic acquired the company’s Connecticut business in 2015.

Expected to close in early 2018, the deal adds around 120,000 internet and 76,000 video customers to Atlantic’s US base. Cogeco said MetroCast’s revenue in 2017 is expected to be around $230 million, with adjusted earnings of $121 million. It added that Atlantic should realise tax benefits of about $310 million.

“The acquisition of the MetroCast cable systems allows Atlantic Broadband to increase its presence in the growing and lucrative US cable market,” Cogeco chief executive Louis Audet said.

“As a long-term investor, CDPQ seeks opportunities to invest in businesses that are resilient to economic cycles, are led by experienced teams and have the ability to sustain growth over time. Cogeco is a good example of this, and we look forward to investing by its side as it pursues its North American expansion,” CDPQ executive vice-president Christian Dubé stated.

CDPQ held C$270.7 billion ($209.6 billion; €183.5 billion) in net assets as of 31 December 2016.

The acquisition follows TPG Capital’s $2.4 billion acquisition of US fibre-optic company Wave Broadband in May. The firm, the private equity arm of alternative asset manager TPG, purchased Wave from Oak Hill Capital Partners and merged the communications company with its own platform, RCN Telecom Services.